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In Ohio, state drilling laws trump owner objections

JULIE CARR SMYTH The Associated Press

Posted:
04/24/2012 10:46:02 AM EDT

Updated:
04/24/2012 10:46:03 AM EDT

COLUMBUS, Ohio -- Retired police officer Ed Hashbarger is watching in anger as drillers converge on his part of eastern Ohio, at times gaining access to coveted oil and gas deposits through a state law that can trump objections of individual property owners.

The U.S. Army veteran contends the practice called mandatory pooling violates his constitutional rights, his Catholic faith -- which calls for safeguarding the environment -- and what his country stands for.

"We do not defend the United States of America so the government can strip me of my rights to my land," said Hashbarger, who expects his land in Bloomingdale will soon be pooled as such deals engulf neighboring properties. "I'm furious over the whole thing."

Mandatory pooling gives drillers the ability to overcome a landowner's objections to drilling on his property if enough neighbors have agreed to the well drilling. The resisting landowner is paid for the oil or gas taken.

Laws allowing mandatory pooling began springing up across the nation in the 1960s in response to what was seen as wasteful over-drilling.

Such laws are drawing new criticism as hydraulically fractured wells reach more heavily populated areas, and public attention rises over oil and gas drilling in the Marcellus and Utica shale formations that lie under Ohio, Pennsylvania, New York and other northeastern states.

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Natural gas drillers are swarming eastern Ohio -- where Hashbarger lives -- as new horizontal drilling technology has allowed access to previously unavailable oil and gas deposits in the shale. Ohio is among states that have been revisiting their drilling laws in order to capitalize on the investment and job creation potential.

Laws on mandatory pooling were intended to assure that profits from drilling were shared among both willing and unwilling property owners, said John Keller, a Columbus lawyer who represents Ohio drillers in their pooling requests.

The arrangement prevents neighbors from allowing drillers to suck resources from under another's land without compensation, while allowing interested landowners to exercise their mineral rights.

He said they were dubbed "conservation statutes" that would discourage several neighbors from each drilling wells extending down into the same deposit "like several straws going into the same Coke bottle." That was seen as both blighting the landscape and shrinking profits for everyone involved by reducing the underground pressure that dictates how much oil or gas is produced.

"People were spending more money and getting less as a result," Keller said.

After Marcellus Shale exploration took off in 2008 and 2009, natural gas industry lobbyists in Pennsylvania put pooling at the top of their priorities list, but no legislation has been introduced. Gov. Tom Corbett, who is viewed as an industry ally, has said he opposes it, calling it tantamount to "private eminent domain." Pennsylvania has an unused and outdated pooling law that applies to a different gas formation below the Marcellus Shale.

Louie Chodkiewicz of Broadview Heights, a Cleveland suburb, unsuccessfully fought a mandatory pooling request from 2007 to 2008. He said the royalty checks he now receives don't make up for the negatives from the well that sits 175 feet off his property. He did not disclose his royalty agreement.

He said the well has marred the air in his neighborhood, the view and quiet enjoyment of his property. He's now saddled with a ruling that he said appears to make him legally responsible for spills and other damage.

Chodkiewicz said he felt he didn't have a chance before the state board that considers mandatory pooling requests, the Technical Advisory Council, because it is dominated by energy industry executives.

"They put their well in and got their way, and they are taking my minerals against my wishes without any signature, like eminent domain," he said. "They're nothing but a bunch of buddies. It's the fox watching the henhouse down there."

Records obtained by The Associated Press through a public records request show the eight-member council has sided with the oil and gas industry in 43 of 56 recommendations since 2009, in cases where private landowners opposed drilling under their land.

Five more requests were put on hold, and four others were resolved. The council recommended denying just three industry requests for mandatory pooling, the data show. One request was rejected before it was heard.

Six of the council's eight members represent oil and gas producers; one represents landowners' royalty interests; and one represents the public. All are appointed by the governor.

The council's recommendations can be accepted or rejected by the chief of the Ohio Department of Natural Resources' mineral resources division. The department says the division chief has agreed with the council all but twice since 2009.

Property owners have a right to appeal the chief's decisions to the Ohio Oil and Gas Commission.

Commission executive director Linda Osterman said the panel has heard six mandatory pooling appeals since 2009. Three were ultimately withdrawn, one was thrown out, and one is pending. The only case decided by the commission in that period affirmed the chief's decision in favor of pooling.

Doug Gonzalez, chairman of the Technical Advisory Council and an executive at Canton-based GonzOil Inc., said the group's pro-industry stances don't indicate a bias by the council.

He said most cases the board reviews have a high percentage of neighbors already on board. Sample maps from recent cases showed anywhere from 70 percent to 95 percent of neighbors in favor of drilling before the Technical Advisory Council agreed to the pooling of holdout properties.

"Should one person with 5 percent of the land prevent the other 95 percent from going forward?" he asked. "Generally in our country the majority rules."

But Chodkiewicz said he's seen where landowners have been told their neighbors have already agreed to drilling leases when that wasn't the case. Such reports of deceptive lease tactics have prompted Ohio Attorney General Mike DeWine to offer an educational website about oil-and-gas leasing for landowners.

Gonzalez said land is most often pooled when a landowner is opposed to the drilling, can't be found or just wants to be left alone.

Hashbarger said he's among those who just want to be left alone.

"I'm not interested in signing a gas lease, and I don't like the idea that the state has a law that can include me in that kind of agreement," he said.